Why do firms strive for non-financial performance

This paper develops a social identity based rationale for why firms strive for non-pecuniary performance outcomes. It extends current social and financial rationales for such motivations. Drawing from social identity and organizational reputation theories, we show that identity overlaps between managers and organizations create incentives to protect and build corporate reputation. These incentives motivate managers to produce non-pecuniary performance outcomes that satisfy stakeholders. We argue that emotional bonds of managers to their organizations create identity overlaps. Further, the incentives to build and protect corporate reputation is moderated by the type of the manager's commitment. We use the family business, a particularly high identity overlap organization, as a context to explore our arguments. Propositions and future directions are included.